This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

New Telecom ETF's Even-Handed Approach

NEW YORK ( TheStreet) -- Earnings season is in full swing and so far this week's results have been mixed.

While we have seen a handful of companies follow Google's (GOOG - Get Report) lead and report standout numbers, optimism has often been offset by tepid and downright dismal numbers from other notables.

Goldman Sachs (GS - Get Report) and Bank of America (BAC) are some of the most recent companies to release uninspiring reports. Goldman reported a $428 million loss in the third quarter, marking only the second quarterly loss ever for the Wall Street titan since going public.

As we head into the latter half of the week, there are still a wide collection of companies waiting to report their quarterly earnings and provide insight into the final months of 2011. They include General Electric (GE), Microsoft (MSFT), Philip Morris (PM) and Union Pacific (UNP).

Telecom goliaths AT&T (T - Get Report) and Verizon Wireless (VZ - Get Report) are two other big names slated to report their quarterly earnings. For ETF investors with exposure to the telecommunications industry, Thursday and Friday will be the days to watch.

Thanks in large part to the ample dividends associated with companies like Verizon, AT&T, and CenturyLink (CTL) many place telecom alongside other defensive sectors like utilities and consumer staples. For ETF investors, however, gaining exposure to this sector through telecom-related funds has traditionally been risky.

Due to the dominance of Verizon and AT&T, most products designed to target this industry designate the largest slices of their portfolios to these two companies. For example, the iShares Dow Jones U.S. Telecommunications Sector Index Fund (IYZ) lists the pair as its two largest positions. Together, they account for close a third of the fund's total assets. In total, the fund's ten largest positions represent over 70% of its portfolio.

IYZ properly reflects the dominance Verizon and AT&T currently have over the telecom realm. However, for long-term investors looking for stability, the top-heavy nature of this fund may be disconcerting. State Street appears to have heard the call for a more evenly distributed telecom option. In the final days of September, the company unveiled the SPDR S&P Telecom ETF (XTL).

Unlike its market-weighted competitors, XTL takes on the telecom sector using a relatively equal weighted indexing strategy. None of the 64 components comprising this newcomer's underlying index represents more than 2.3% if its assets. AT&T and Verizon account for approximately 1.8% a piece.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
XTL $57.86 0.78%
IYZ $29.78 0.37%
GS $190.47 0.70%
GOOG $750.26 0.28%
T $33.57 0.36%


Chart of I:DJI
DOW 17,798.49 -14.90 -0.08%
S&P 500 2,090.11 +1.24 0.06%
NASDAQ 5,127.5250 +11.3820 0.22%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs